Shoe chain Footstar Inc on Tuesday revealed it swung to a profit during the third quarter despite a sharp slide in sales amid a weak retail environment.

The New York-based retailer reported net income of $3.8 million, or 19 cents per share, versus a loss of $44.5m, or $2.20 per share, in the year-ago period.

Excluding restructuring and other charges, its net profit was $14.1m, or 69 cents per share, compared to $22.3m, or $1.08 per share, in 2001.

Sales for the 13 weeks ended September 28, slumped 10.6 per cent to $586.8m from $656.4m but that the fall partly reflects a reduction in the number of stores in both the Meldisco and athletic segments versus the year-ago period.

Same-store sales fell 5.3 per cent with Meldisco's same-store sales down 1.6 per cent and athletic unit same-store sales down 9.2 per cent.

Looking ahead, it expects fourth quarter earnings in the range of 30-50 cents per share, versus 60 cents last year, while for the full year, it sees earnings between $1.83 and $2.03 per share.

Chairman and CEO Mickey Robinson said: "While our Meldisco business performed reasonably well, Footstar's overall results reflect a disappointing quarter in the athletic segment, particularly at Footaction.

"Like many other retailers, Footaction experienced a soft back-to-school season affected by reduced mall traffic and the soft economy. Fashion trends favouring `classic footwear' in place of higher-priced marquee styles also impacted results."

He concluded: "At Meldisco, although total sales were lower due to the closing of Kmart and Ames stores, operating margins have remained constant. Our business within Kmart has been very stable all year."

Separately on Tuesday, Footstar announced it had entered into a new $325m credit facility due to expire in October 2005, replacing a previous facility that would have expired in May next year.